Amassing enough money to retire can be a daunting task. Taking advantage of every opportunity to save can help.
Consider taking full advantage of any retirement savings options your employer offers, such as a 401(k) or governmental 457(b). Make sure you are contributing enough to get the company to match.
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Invest in Yourself
If you want to make sure you can enjoy the retirement lifestyle of your dreams, you need to start saving now. And while this may seem like a daunting task when you’re in your 30s, it can be easier than you think.
A few simple habits can help you get started. For example, try implementing the “pay yourself first” strategy, which automatically allocates a portion of every paycheck into savings or investments. This can be particularly effective if you do it through your employer’s retirement plan, which can offer tax benefits. And it can be even more beneficial if you take advantage of an employer match, which could increase the amount of money you save by an extra 10% to 20%.
Another way to save is through a traditional or Roth IRA, which also offers tax benefits. By investing through an IRA, your earnings aren’t subject to federal income taxes, and the growth on those funds isn’t taxed until you withdraw them in retirement. And if you’re self-employed, consider opening a SEP IRA.
If you own a home, your mortgage is another source of income that can help fund your retirement goals. Real estate tends to appreciate over time, and as you pay your mortgage, your net worth rises, too.
Finally, consider a life insurance policy that can provide an income stream in the event of your death. While many people don’t want to think about this possibility, it’s important to be prepared if the unexpected occurs.
With pensions becoming a thing of the past and Social Security replacing only a portion of preretirement paychecks, maximizing your retirement and insurance benefits is more important than ever. Getting started early, staying disciplined, and working with a financial professional who can help you set goals and create a plan to achieve them are all keys to success.
Invest in Your Family
With pensions fading into the distance and Social Security only replacing a portion of preretirement paychecks, it’s up to each individual to take charge of their retirement savings and investing. That means maximizing every opportunity to save, tracking investment performance and figuring out how to convert those savings into steady income in retirement.
The retirement plan offered by your company is one of the finest places to begin. See whether your employer matches employee contributions. If it does, contribute enough to take advantage of it—even if you can only spare a small percentage of your monthly salary, that extra money could make a big difference in the long run.
You can also invest in yourself by paying down high-cost debt, such as credit card balances or student loans, as soon as possible. The interest on those debts is usually much higher than the potential investment returns you’ll earn in your retirement account, so it pays to pay down your debt as quickly as possible.
Another smart way to invest in yourself is with life insurance. Whole life insurance policies, often more affordable than other types of permanent insurance, offer a tax-deferred savings component known as cash value. Some policyholders use this to supplement their retirement savings, especially when the stock market is down.
While saving and investing for retirement may seem monumental, the sooner you start, the better. Saving and investing even a modest amount each month will have a bigger impact over time than starting later, as the dollars have more years to compound and grow—and will be worth more in retirement than if you saved and invested them at a later age.
Invest in Your Future
As you begin a new year, one resolution that could help your financial future is committing to save and invest more. Starting a retirement savings plan is never too late, and the earlier you do it, the more compound interest will allow your money to grow.
Many firms have 401(k) plans, which enable employees to make pre-tax contributions to their retirement. This allows investment earnings to grow tax-free until you make withdrawals in retirement.
Other retirement savings options include individual retirement accounts (IRAs), which allow more investment choices than a traditional employer-sponsored plan like a 401(k). Investment options include stocks, bonds, ETFs, and mutual funds.
Your risk tolerance, time horizon, and level of investing experience should all be considered when deciding which investments to include in your retirement plan. Additionally, you should ensure that your contributions are sufficient to qualify you for employer-sponsored matching programs.
Reducing whatever debt you may have is one approach to creating more discretionary income for investing in the future. Student loans and other high-interest debt may quickly mount up, and their compound interest rates frequently outstrip the growth of your investment portfolio.
Another potential investment is a whole life insurance policy. This type of policy’s cash value can supplement distributions from 401(k) and other accounts subject to market fluctuations. Its guaranteed cash values can provide a steady stream of income during retirement. In a down market, drawing from a policy’s cash value is often more helpful than from a 401(k) or another investment account that can fluctuate with the market.
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